Higher oil prices will flow through to fuel pricing, stimulating revenue growth.
Los Angeles, CA (PRWEB) March 10, 2012
The Fuel Dealers industry is expected to generate revenue of about $44.7 billion in 2012, growing at an average annual rate of 1.7% over the five-year period, according to IBISWorld. For the most part, revenue depends on fuel prices, which are closely correlated to crude oil and natural gas prices. In the years leading up to and including 2008, revenue rose very strongly because of higher fuel prices. However, according to IBISWorld industry analyst Tony Danova, “In 2009, sluggish sales volumes and much lower prices eroded that gain.” Subsequently, a rebound in fuel prices and cold weather conditions helped revenue expand by 10.0% in 2010. As the global economy gains steam, fuel prices are expected to increase in 2012, leading to an expected revenue increase of 4.6% in 2012 alone.
While the recent upswing in the economy has helped the majority of industry firms, those that have implemented wholesaling processes into their business model have benefited more substantially over the past five years. For example, many direct selling market segments experienced thinning profit margins over the past five years, as firms were unable to pass down rising fuel prices to end consumers. In response to price volatility, many industry firms consolidated to handle more fuel volume and distributed this fuel through wholesale strategies. Danova says, “By handling more volume, firms eliminated some of the risk that comes from passing along costs to consumers.” Consolidation took place, with firms making acquisitions rather than opening new locations. As a result, the number of establishments is estimated to grow at an average annual rate of 0.6% to 14,198 in the five years to 2012. The Fuel Dealers industry has low concentration. It is made up of several large firms and thousands of small, independent operators that sell LP gas and heating oil. The largest fuel dealer, UGI Corporation and its AmeriGas brand of dealers, accounts for a small percentage of revenue.
Over the five years to 2017, IBISWorld projects that revenue will still be highly sensitive to trends in oil prices. Oil prices are forecast to rise over the next five years, benefiting industry operators. Firming growth worldwide will underpin the increase in oil prices, despite some growth in output from the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers. In general, higher oil prices will flow through to fuel pricing, pushing up the industry's revenue.
For more information visit IBISWorld’s Fuel Dealers in the US industry page
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This industry sells heating oil, propane and other fuels directly to end-users. Firms also deliver heating oil, propane and other fuels to domestic and commercial premises.
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Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.